Iran Nuclear Deal: Regional Implications

Introduction

Iran’s nuclear deal with P5+1 has ended the standoff between Iran and the United States. The study aims at identifying the salient points of the agreement and its implications on the region.

Iran has been a beneficiary of US Administration’s Atom for Peace Program. The United States had provided Iran with a small research reactor fueled by highly enriched uranium.  Iran signed Nuclear Non-Proliferation Treaty in 1968 as a non-nuclear weapon state and ratified it in 1970. In 1973, Shah of Iran unveiled an ambitious plan to install more than 20,000 MW of nuclear power in Iran by the end of century and directed the newly established Atomic Energy Organization of Iran to take charge of this task. In subsequent years, Iran concluded several contracts with different states and by the time of revolution in 1979, Iran had developed an impressive baseline capability in nuclear technologies. The progress was halted after revolution but was renewed in 1990s when Iran started pursuing an indigenous nuclear fuel cycle capability by developing a uranium mining infrastructure and experimenting uranium enrichment.

In 2002-03 satellite images of undeclared nuclear facilities in Iran raised concerns of international community and IAEA carried out facilities inspections and met with Iranian officials to explore the new developments in Iran’s nuclear program. From time to time various diplomatic initiatives were taken to deal with Iranian nuclear issue along with imposition of sanctions. In October 2013, an interim deal was signed between Iran and P5+1.

Nuclear Accord between Iran and (P5+1)

Obama Administration was also keen to normalize its relation with Iran to achieve its regional objectives. The removal of sanctions has been the sole objective of Iran to negotiate the deal. It has been facing three dimensional international sanctions on the pretext of its nuclear programme: the UN sponsored sanctions; the US imposed sanctions and the European Union’s sanctions.

The preliminary nuclear accord announced in April 2015 between Iran and P5+1 was to limit Iran’s nuclear programme for fifteen years. It aimed at reducing Iran’s existing stockpiles of nuclear fuel and its capacity to produce new fuel to a level that would take a year for Iran to manufacture enough fuel for a nuclear weapon if Iran chose to violate the accord.

In this regard, the most daunting task has been ensuring Iran’s compliance with the terms of the agreement. It was not sorted out in the April accord that how much access monitors would have and what would happen if a disagreement occurred. The Americans wanted all nuclear facilities anywhere in the country including military facilities to be subject to inspection to remove any doubts about covert nuclear facilities. While Iran showed a mixed response as Iran’s supreme leader Ayatollah Khamenei ruled out inspections of military facilities on May 20 but Iranian officials in Vienna while talking to journalists showed their willingness to accept additional, intrusive inspections proposed by the International Atomic Energy Agency (IAEA).  Another related issue that needed to be discussed in detail was the diluting, neutralizing, and removing existing stockpile of nuclear fuel.

An accord was signed to limit Iran’s nuclear capability for more than a decade in return for lifting of sanctions. Following are the salient points of the nuclear accord.

  • A deal was reached on Iran’s nuclear programme, the core of the agreement lies in restricting the amount of nuclear fuel that Iran can keep for 15 years. The stockpiles of low enriched uranium will be reduced by 98 percent most likely by shipping much of it to Russia.
  • Iran will not produce or acquire highly enriched uranium or plutonium for 15 years. Verification measures will stay in place permanently as Tehran and IAEA concluded an agreement to address all questions about Iran’s past actions within three months and completion of this task was fundamental for sanctions relief.
  • Iran preserves the right to produce as much nuclear fuel as it wishes after 15 years of agreement and has been allowed to conduct research on advanced centrifuges after 8 years. An embargo on sales and purchase of conventional arms would be lifted after 5 years and embargo on ballistic missiles will be lifted after 8 years. This was the main point of divergence between two sides as Iran desired the lifting of embargoes on ballistic missiles and conventional arms but Western states insisted on continuation of embargoes for some time.
  • The US secured another commitment from Iran that was not part of previous agreement and Iranian officials agreed on ban on designing warhead and conducting tests including detonators and nuclear triggers that may contribute to the design and manufacture of a nuclear weapon.
  • Sanctions would be re-imposed if 8 member panel (P5+1, EU and Iran) determine that Iran is violating the terms of agreement.

 

Regional Implications

Impact on Non-Proliferation

The question arises whether the deal was for achieving non-proliferation objectives or to achieve geopolitical objectives of the United States. Critics of the deal claim that it would not curb Iranian nuclear programme completely but impose restrictions for fifteen years.

Security Implications

Arab states are concerned that the deal will increase Iranian involvement in domestic Arab affairs because the deal would give Iran access to substantial financial resources.

Impact on Energy Market

The deal will allow Iran’s return to energy market. It is reported that Iran has loaded a number of cargo tankers with 30 or more million barrels of oil that would be sold as soon as sanctions are lifted. Iran is in an advantageous position to sell to Europe, East Asia and the Middle East. Iranian oil exports to China and Europe were replaced by a number of suppliers’ most importantly Saudi Arabia and Russia. After the deal it is expected that Saudi Arabia would defend its market share resulting in lower oil prices.

Conclusion

The Iran nuclear agreement is going to resolve a major issue in Iran-US bilateral relations that would have far-reaching impact on Iran’s relations with other states as well regarding energy trade.  The European Union was the largest trading partner of Iran before sanctions were imposed in 2012.  A few days after the deal was signed the EU removed sanctions on two oil companies of Iran.  But the real challenge comes from snap back provision that in case of non-compliance sanctions will be re-imposed though there has been a grandfather clause in the agreement protecting investments made before any complaints of violations are reported. Though challenges outweigh the opportunities but there is hope that nuclear agreement may impact the region positively.

On July 14, 2015, Iran and IAEA signed roadmap regarding the Islamic Republic’s nuclear work. As part of the roadmap, the IAEA is required to finish its investigation on Iran’s nuclear activities and submit a report to the Agency’s Board of Governors by December 15.  Under this agreement Iran was required to cooperate with IAEA regarding its past and present nuclear activities. IAEA in its regular reports confirmed that Tehran was complying with terms of agreement with IAEA required for the implementation of JCPOA.

The views expressed in the article belong to the author and do not reflect the policy of the organization.

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